Network hardware, a sector that has benefited as much as any from the recent tech rally, continued to be hotly debated Tuesday as analysts took divergent views on two Internet gear names.

Among the skeptics is Wachovia, which downgraded Juniper ( JNPR) to underperform from market perform, citing channel checks showing weakening demand in Asia and Europe.

Meanwhile, J.P. Morgan was positive on Ciena ( CIEN), saying chances for revenue growth are improving over the next two to four quarters.

Regarding Juniper, Wachovia noted that the company remains one of the most leveraged to international sales in the sector, a trend that bodes poorly for the second quarter. "In China we're hearing that SARS has delayed project planning and spending as many workers at the major telecom service providers, including China Netcom and China Telecom, worked from home at the height of the crisis."

"In Europe, national service providers in the five largest countries (where Juniper has significant exposure) spent only an average of 16% of their budgets in the first quarter of 2003," Wachovia wrote. "Recent conversations with major service providers in the region indicate the deficit is unlikely to be made up, so we should expect further spending cuts for the full year."

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